Human embryonic stem cells (hESCs) are pluripotent cells capable of differentiating into any cell type of the body. It has long been known that the adult stem cell niche is vital for the maintenance of adult stem cells. The cornea at the front of the eye is covered by a stratified epithelium that is renewed by stem cells located at its periphery in a region known as the limbus. These so-called limbal stem cells are maintained by factors within the limbal microenvironment, including collagen IV in basement membrane and limbal fibroblasts in the stroma. Because this niche is very specific to the stem cells (rather than to the more differentiated cells) of the corneal epithelium, it was hypothesized that replication of these factors in vitro would result in hESC differentiation into corneal epithelial-like cells. Indeed, here we show that culturing of hESC on collagen IV using medium conditioned by the limbal fibroblasts results in the loss of pluripotency and differentiation into epithelial-like cells. Further differentiation results in the formation of terminally differentiated epithelial-like cells not only of the cornea but also of skin. Scanning electron microscopy shows that some differences exist between hESC-derived and adult limbal epithelial-like cells, necessitating further investigation using in vivo animal models of limbal stem cell deficiency. Such a model of hESC differentiation is useful for understanding the early events of epithelial lineage specification and to the eventual potential application of epithelium differentiated from hESC for clinical conditions of epithelial stem cell loss. Disclosure of potential conflicts of interest is found at the end of this article.